Before
this Court is a motion to compel the Consumer Financial
Protection Bureau to comply with a subpoena to produce
documents. For the reasons that follow, the Court will
transfer the motion to the court that issued the subpoena-the
U.S. District Court for the Northern District of
California-pursuant to Federal Rule of Civil Procedure 45(f).

The
movants (collectively, “Victim Services”)
previously contracted with state prosecutors in California to
manage a diversion program for people accused of writing bad
checks. In a putative class action pending in the Northern
District of California, several California residents allege
that Victim Services unlawfully collected fees related to
that diversion program. See Breazeale v. Victim Servs.,
Inc., No. 3:14-cv-5266 (N.D. Cal.); Decl. of Sean M.
Hardy Supp. Mot. Compel (“Hardy Decl.”) Ex. 1, at
1. Specifically, those plaintiffs claim that notices sent to
individuals eligible for the program created a false
impression that Victim Services was a law enforcement entity
(as opposed to a mere debt collector) and that the notices
falsely suggested that, without enrollment in the diversion
program, criminal charges would be imminent (even if the
chances of prosecution were slim to none). Hardy Decl. Ex. 1
¶¶ 2-3.

The
year that class action was filed, the Consumer Financial
Protection Bureau brought an enforcement action against
Victim Services based on the same alleged conduct. Hardy
Decl. Ex. 2, at 1. The parties settled that action through a
stipulated final judgment and consent order approved by the
District of Maryland in March 2015. Id. Ex. 3. The
consent order enjoined Victim Services from continuing its
diversion program and imposed a $50, 000 civil penalty.
Id. at 4-9. It did not require Victim Services to
pay restitution to individuals who had paid them
diversion-program fees.

Several
months after entry of the consent decree, however, the Bureau
allocated $23.26 million from its Civil Penalty Fund to
reimburse people who paid diversion fees to Victim Services.
Decl. Rumana Ahmad Supp. Opp'n Mot. Compel ¶ 3. The
Civil Penalty Fund stores fines that the Bureau has collected
in its enforcement actions. 12 U.S.C. § 5497(d)(1). The
Bureau may use that money to pay “the victims of
activities for which civil penalties have been imposed under
the Federal consumer financial laws.” Id.
§ 5497(d)(2).

With
the class action still pending in California, Victim Services
in October 2016 served a subpoena on the Bureau that had been
issued by the California court. The subpoena requested all
documents and communications related to the Bureau's
payment of individuals after the enforcement action. Hardy
Decl. Ex. 6. The Bureau responded with a letter asserting
several objections to the subpoena. Id. Ex. 7. The
parties conferred by telephone but were unable to resolve
their disagreement. See id. Ex. 9.

Victim
Services then filed this motion to compel the Bureau's
compliance with the subpoena. As required by Federal Rule of
Civil Procedure 45(c), the motion was filed in this Court, as
the federal district court where compliance with the subpoena
is required. In opposing the motion, the Bureau contends that
complying with the subpoena would impose a significant burden
on the Bureau because, under the Privacy Act, 5 U.S.C. §
552a, it would have to issue notices to the nearly 40, 000
individuals whose information would be disclosed. And the
Bureau claims that the cost of such notification-somewhere
between $40, 000 and $82, 000, plus staff resources-far
outweighs the minimal relevance of any disclosed information
to the California litigation.

After
reviewing the parties' briefs, this Court has determined
that this motion should be transferred to the U.S. District
Court for the Northern District of California-the court in
which the putative class action against Victim Services is
pending. In subpoena-related disputes, the federal district
court where compliance is required “may transfer a
motion . . . to the issuing court . . . if the court finds
exceptional circumstances.” Fed.R.Civ.P. 45(f). Where
exceptional circumstances exist, a court may transfer such a
subpoena-related motion sua sponte. See,
e.g., Orix USA Corp. v. Armentrout, 2016 WL
3926507, at *2 (N.D. Tex. July 21, 2016) (“Rule 45(f)
does not require that a motion to transfer be filed . . .
.”). The advisory committee note accompanying Rule
45(f) provides further guidance on what constitutes
exceptional circumstances: “transfer may be warranted
in order to avoid disrupting the issuing court's
management of the underlying litigation, as when that court
has already ruled on issues presented by the motion or the
same issues are likely to arise in discovery in many
districts.” Fed.R.Civ.P. advisory committee's note
to 2013 amendments. Those interests must, however, be weighed
against “burdens on local nonparties subject to
subpoenas” that could result from transfer.
Id.

The
Court finds that exceptional circumstances warrant transfer
of this motion, as this Court's resolution of the motion
could substantially interfere with the California court's
management of the underlying class action and that potential
interference outweighs any potential burden on the Bureau.

The
decision of whether to order the Bureau's compliance with
the subpoena depends, first and foremost, on whether the
information regarding payment from the Civil Penalty Fund
“is relevant to any party's claim or
defense.” Fed.R.Civ.P. 26(b)(1). If the material were
irrelevant as a matter of law-which the Bureau argues is the
case-then Victim Services would not be entitled to its
production no matter how insignificant the burden on the
Bureau. If a court were to find the material relevant, it
would then weigh that relevance against the Bureau's
costs of compliance (which in turn would require resolving
the parties' dispute over whether the Privacy Act demands
individualized notice to people whose information is shared).

The
problem here is that resolving the parties' dispute over
relevance would require the court to resolve a difficult and
contested legal question that may prove central to the
underlying class action. Specifically, Victim Services makes
a colorable argument that individuals who obtained payments
from the Bureau's Civil Penalty Fund are ineligible to
obtain full restitution in the pending class action under the
so-called “double recovery rule.” See EEOC v.
Waffle House, Inc., 534 U.S. 279, 297 (2002)
(“[I]t goes without saying that the courts can and
should preclude double recovery by an individual.”). If
that were true, information about the Bureau's payment to
individuals-including the identity of payees and the amounts
paid-would be highly relevant to Victim Services's
defense, and perhaps to the certification and composition of
the putative class as well.

Thus,
the relevance of the information turns squarely on whether
the Bureau's payments from the Civil Penalty Fund could
implicate the double recovery rule. To support its side of
that debate, Victim Services relies on the Ninth
Circuit's decision in California v. IntelliGender,
LLC, 771 F.3d 1169 (9th Cir. 2014), which held that the
double recovery rule barred the State of California from
seeking restitution on behalf of its citizens against a
private defendant who had already paid those same individuals
restitution through a class-action settlement, id.
at 1179-80. The Bureau responds that IntelliGender
is inapposite and that the double recovery rule has no
operation where the government, as opposed to the
class-action defendant itself, paid the victims their initial
compensation.

Without
wading too much into their merits, these arguments show that
the question of whether the double recovery rule forecloses
restitution in Victim Services's case is an open and
debatable question. And, importantly, it is a question that
will almost certainly need to be answered at some point in
the pending class action against Victim Services-whether at
the class certification stage, in resolving the case's
merits, or in calculating damages. Thus, beyond resulting in
a redundant resolution of the issue, this Court's
decision on the relevance of the information Victim Services
seeks-particularly if inconsistent with the California
court's own view-could disrupt that court's
management of the underlying class action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover,
the Court does not find that transferring this motion will
significantly burden the Bureau. The Bureau is a large
federal government agency with substantial resources. It
regularly litigates in courts outside the District of
Columbia, including those in California. See, e.g.,
CFPB v. Morgan Drexen, Inc., 60 F.Supp.3d 1082 (C.D.
Cal. 2014) (Bureau enforcement action). The parties have
formulated their positions in briefs but have not appeared
before this Court for a hearing. And to the extent that the
Bureau might be burdened by the distance between the Northern
District of California and its Washington offices, the
committee when adopting Rule 45(f) encouraged judges
“to permit telecommunications methods to minimize the
burden a transfer imposes on nonparties.” In any event,
the slight burden imposed by transferring this motion is
...

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